CYIL 2014

417

UMBRELLA CLAUSE ȃ ADDITIONAL PROTECTION OF INVESTMENT BY CLAUS…

or enforce any commitment or undertaking”

and “(2)

Neither Party may condition

the receipt…of an advantage, in connection with…an investment in its territory of an

investor…on compliance with any requirement”

. The “automatic” protection is given

once the host state [has] committed a breach of a special investment, despite the

fact that it is not yet clear what effect the words “commitment” and “obligation”,

as well as any nuances of these could have in their subsequent interpretation by

the international tribunal, could have

Therefore, the Tribunal’s interpretation and

application of particular principles of contract law to resolve the conflict between the

BIT and the contract is often mistaken, as the examples given above show.

Nevertheless, any Arbitral Tribunal has to follow the proper language of the BIT,

specifically the umbrella clause, as well as the language of an investment agreement

between the parties, with the investor and the State exercising their commercial

subjectivity, i.e,

iurie gestionis

, and not

iure imperii

are bound. If the text of the BIT

and the wording of the investment agreement are clear, there is no place for any

interpretation of the will of the parties. In this regard, when the ordinary meaning of

the text (of the Treaty or the contract) is clear and makes sense in its context, there

is no occasion to have recourse to other means of interpretation. In the

Phosphates in

Morocco

case, the Permanent Court of International Justice advised that, in case of

doubt, an international court should give a restrictive interpretation of a clause in a

treaty, because such a clause “must on no account be interpreted in such a way as to

exceed the intention of the States that subscribed to it.”

However, if the words in

their natural meaning are ambiguous or could lead to an unacceptable outcome, then

the Court, by resorting to other methods of interpretation, must seek to discover

what the parties actually meant “when they used those words”. These premises was

also confirmed in an earlier statement of the Court in the

UN Advisory Opinion

on Competence of the General Assembly for the Admission of a State to the United

Nations

In addition, The International Court of Justice (ICJ) drew attention to the

case

concerning Maritime Delimitation and Territorial Questions between Qatar and

Bahrain

to what it had previously declared in the Case concerning

Territorial Dispute

Libyan Arab Jamahiriya/Chad

(Judgment dated February 3, 1994): “In accordance with

customary international law, reflected in Article 31 of the 1969 Vienna Convention on

the Law of Treaties, a treaty must be interpreted in good faith in accordance with the

ordinary meaning to be given to its terms in their context and in the light of its object

and purpose. Interpretation must be based above all upon the text of the treaty. As

a supplementary measure recourse may be had to means of interpretation such as

the preparatory work of the treaty and the circumstances of its conclusion.”

And

finally, the ICJ reaffirmed its conclusion in the case concerning

Rights of Nationals of

Phosphates in Morocco Case (Italy v. France)

, PCIJ, Ser. A/B No. 74, 1938, p. 14.

Competence of the General Assembly for the Admission of a State to the United Nations